Cash sales reach nearly 43% of all sales in 1st quarter
Tighter credit standards may be squeezing out the average buyer, but that just means that there are more properties available for investors. And investors are capitalizing on the increasing supply more frequently than they have since 2011.
According to RealtyTrac’s U.S. Institutional Investor & Cash Sales Report for the first quarter, the share of all-cash sales climbed to 42.7% of the total sales in the first three months of 2014.
That’s the highest since RealtyTrac began tracking cash purchases in 2011. It’s also up from 37.8% in the fourth quarter of 2013 and up significantly from 2013’s first quarter, when cash purchases made up only 19.1% of the market.
“Strict lending standards combined with low inventory continue to give the advantage to investors and other cash buyers in this housing market,” said Daren Blomquist, vice president at RealtyTrac. “The good news is that as institutional investors pull back their purchasing in many markets across the country, there is still strong demand from other cash buyers — including individual investors, second-home buyers and even owner-occupant buyers — to fill the vacuum of demand left by institutional investors.”
As seen in the graphic below, cash sales have been on the rise since the first quarter of last year, with a massive increase in 2013’s third quarter.
As Blomquist said, institutional investors (entities that have purchased at least 10 properties in a calendar year) made up a much smaller share of the market in the first quarter. Institutional investors accounted for 5.6% of all U.S. residential sales in the first quarter, down from 6.8% in the fourth quarter of 2013 and down from 7% in the first quarter of 2013 to the lowest level since the first quarter of 2012.
The top five markets for all-cash purchases were all in Florida. The number one market for all-cash purchases was Cape Coral-Fort Myers, where cash purchases made up 73.6% of the sales in the first quarter. The rest of the top five were Miami (67.1%), Sarasota (65.1%), Palm Bay (64.1%), and Lakeland (61.8%).
Other major metro areas with more than 50% all-cash sales included New York (57.0%), Columbia, S.C., (56.1%), Memphis (54.9%), Detroit (53.5%), Atlanta (53.2%) and Las Vegas (52.2%).
The all-cash buyers seemed to be getting their properties on the cheap as well. The average sales price of an all-cash purchase in the first quarter was $207,668. That’s 13% below the average estimated full market value of the properties that were purchased: $237,900.
“Institutional investors have bought up much of the affordable inventory they are traditionally interested in, which explains the decrease in institutional investor sales,” said Chris Pollinger, senior vice president of sales at First Team Real Estate, covering the Southern California market.
“We are seeing a rise in foreign buyers purchasing high-end homes, which is contributing to the rise in all-cash purchases,” he said. “Inventory shortages as well as lending regulations favor the all-cash buyer, which explains the increase in cash sales on both a national and local level.”
-Ben Lane @ HousingWire.com. View original article here.
Properties sold faster in March – at a median of 55 days – due to low inventories of homes for sale nationwide, according to the latest Realtors® Confidence Index. The index is based on a survey of more than 3,800 Realtors about their transactions in March.
Short sales were on the market longest – 112 days in March compared to 98 days in February, according to the report. Foreclosed homes were on the market 55 days.
About 37 percent of real estate professionals report that properties had been on the market for less than a month. In February, 34 percent of practitioners reported the same.
Buyer traffic was also up in March, although demand was softer than a year ago.
Still, Realtor confidence about current market conditions ticked up in March, reflecting a typical seasonal increase. Their confidence about the outlook for the next six months also improved but is lower than what it was a year ago, according to the report.
The biggest concerns among Realtors remain low levels of inventories, tight credit conditions, and uncertainty about flood insurance regulation, according to the Realtors Confidence Index.
Realtors continue to believe prices will increase over the next 12 months but at a “modest pace” – an average of about 4 percent over the next 12 months. The states that have the most optimism about price increases – expecting increases of about 5 percent to 7 percent over the next 12 months – are California, Oregon, Nevada, Georgia, Florida and Hawaii. States that expect a 3 percent to 5 percent price increase are Washington, North Dakota, Texas, Michigan, New York, and the Washington, D.C., metro area.
“Low inventory compared to demand is expected to continue to buttress prices, as well as the declining share of distressed sales in the market,” the report notes.
The Realtors Confidence Index is available online.
Contact my team today for all your real estate needs: specializing in luxury and high end properties. Focused on giving you the best home sale experience.
Source: “Properties Sold Faster in March, Typically at 55 Days in March 2014,” National Association of REALTORS®’ Economists’ Outlook Blog (May 5, 2014) and REALTORS® Confidence Index for March
Ever feel like the notifications on your iDevice are never ending and distracting you from whats making you money on a daily basis? This easy trick will help you out two fold and allow you to first off, charge your iPhone or iPad nearly 2x’s faster than traditionally charging methods by “silencing” the wifi and cellular signals. Your device no longer has to use these radios to constantly search or maintain connections to the web or cellular towers. It works especially well if you have no other means than to charge your device ad-hoc from your MacBook and the “juice” isn’t as impactful as a wall charger. The second added feature may actually benefit you more than having a fully charged iDevice at any given time. Give yourself 30 minutes of peace…….no longer are you constantly being harassed by dings, bells and whistles about your latest Instagram “like” or Facebook friend request while your trying to close some deals. Dont ever miss out on that listing appointment or phone call from that multi-millionaire client because your iPhone is dead as a door nail again. Plan ahead and if need be use this easy tactic to get that battery back to 100% fast and create some new business for yourself at the same time.
Becoming a successful real estate investor requires being able to find good real estate investment deals and put them together. Your job is not to become an closing attorney, a management expert, or a repair person. Use professionals!
You must learn how to appraise and find the true value of real estate this information will help you make better investment decisions. Realtors, appraisers, and banks determine what a property is worth by looking at comparable sales usually three to five sales of similar property that has recently sold in the same neighborhood. You must be able to do the same.
Getting a list of comparable prices of properties bought or sold (and when it sold) for the neighborhood you need information about, and asking active real estate investors in your area what the market is like will be helpful and making a better investment decision.
What is the ideal market for investing?
There is no such thing as an ideal real estate market for investing. It tends to be more difficult to find bargains in rising markets if the market keeps rising the probability of selling the property quickly for a large profit increases. In contrast but when property values are falling more bargains become available.
You need to be able to assess the true value of properties based on when you expect to sell. Your purchase must be made at a good enough discount to allow for a profitable sale at a later date.
Leverage is very important for investors because the less cash you put down on each property the more properties you can buy. If the properties go up in value your rate of return goes up. However if the properties go down in value and you have a lot of debt on the property this can result in negative cash flow.
Since real estate is generally cyclical negative cash flow is only a short-term problem and can be handled if you have other income or a cash reserves. This makes “Nothing down” investing very helpful to protect against negative cash flow for high leverage investor.
If you are a long term real estate investor leverage will work in your favor if the markets in which you invest appreciate in the long run and your income from the properties can pay for most of your monthly debt.
Strategies to limit risk
To limit risk become educated in your local real estate market first by understanding the large scale trends from global down to national regional and specific neighborhoods. Learn about target neighborhoods with the help of successful real estate investors in your area along the way.
Real estate investors can help you interpret market indicators such as the average length of time houses have been on the market this month versus last month or last year. With this information it will help you make better investment decisions.
It is important not to guess the future of a local real estate market you need to have a clear plan in mind when purchasing property. As a real estate investor you must know exactly how you will exit the property before you buy. And have a backup plan or two in case the first course of action doesn’t work. You must know your market and your plan before you begin to invest.
-Contributed by Andrey at http://www.flipt.co
There are five houses on your street for sale, all with the same number of bedrooms and baths, and priced about the same. What can you do to make your home stand out from your neighbors? The answer is to have the cleanest home on the block. Selling a home is like dating. There are a lot of choices out there. You have to look good, smell good and present yourself in a good light, or there won’t be a second date.Interested buyers will be spending a lot of time in your home, checking out all the surfaces, nooks and crannies. A dusty home can be a real turn-off for a potential buyer who starts sneezing after entering the foyer. To prepare for this, all you need to do is clean, clean, clean.
Here are some specific ideas from members of Florida Realtors® to get your home ready for a white-glove inspection:
+Top it off — Most cleaning takes place in locations that can be seen, but don’t forget that dust tends to collect on top surfaces. That means cleaning pictures, paintings, mirrors, medicine cabinets, intercoms, chair rails, moldings, wall units, breakfronts, bookcases, refrigerators, air returns, headboards, storage units, closet shelves, pantry shelves, doors, window ledges, wooden valances, grillwork, chair rungs, fixtures, backsplashes, exhaust-fan hoods, fan blades and books.
+Less is more — Start packing for your move when you list your home for sale. That means you’ll have less to keep clean while your home is being shown. This makes cleaning easier, and makes your place look more like a “model home.”
+Make a checklist — Make a list of the 10 things that must be cleaned before Realtors arrive with potential buyers. Keep your list handy in an inconspicuous place so you’ll always be ready for guests. Here are some suggestions for your cleaning list:
-Sweep the porch
-File the mail
-Sweep or wash the foyer floor
-Clean and shine the sinks
-Make the beds
-Clean and polish kitchen appliances
-Pick up books, afghans and pillows
-Remove dishes from the sink
-Put newspapers in the recycling bin
-Keep magazines neatly arranged in a magazine rack
-Take care of any pet dishes, toys, litter boxes or messes.
Thanks you to floridarealtors.org for the attached article.
10. You can sell now for more money and we will provide for a delayed closing or extended occupancy until early next year.
9. Even though your house will be on the market, you still have the option to restrict showings during the six or seven days around the Holidays.
8. January is traditionally the month for employees to begin new jobs. Since transfers cannot wait until Spring to buy, you need to be on the market during the Holidays to capture the market.
7. Some people must buy before the end of the year for tax reasons.
6. Buyers have more time to look for a home during the Holidays than they do during a work week.
5. Buyers are more emotional during the Holidays, so they are more likely to pay your price.
4. Houses show better when decorated for the Holidays.
3. Since the supply of listings will dramatically increase in January, there will be less demand for your particular home. Less demand means more money for you.
2. Serious buyers have fewer houses to choose from during the Holidays and less competition means more money for you.
And the number one reason why your seller should list during the Holidays …
1. People who look for homes during the Holidays are more serious buyers!